GBP/USD confirms resistance at 1.6822/14

Technical Analysis

EUR/USD forces its way through 1.3823/15

“With the increased market expectations for QE providing support to European asset markets and peripheral markets outperforming as a result of renewed foreign investor appetite, we would anticipate EUR remaining supported, at least until the ECB decides to take action.”

- Morgan Stanley (based on MarketWatch)

• Pair’s Outlook

  EUR/USD is still struggling to decouple from the monthly pivot point, as it is apparently facing tough resistance. However, if 1.3823/15 is broken, there will be no significant levels until 1.39, which is supposed to be a ceiling for the currency pair, even though both the short and long-term technical indicators are pointing upwards. After the test of the down-trend, the Euro is expected to come under strong selling pressure, which could then alleviate near 1.37.

• Traders’ Sentiment

  SWFX market participants largely stick to the view that the common currency is going to depreciate—65% of open positions are short. At the same time, the share of sell orders is on the rise—it increased from 60% up to 64%.

GBP/USD confirms resistance at 1.6822/14

“The [BOE] minutes are highlighting a rise in wages and a more durable recovery and is also quiet about sterling strength. So we could see sterling recover.”

- Western Union (based on Reuters)

• Pair’s Outlook

  Although at first it seemed as if the resistance at 1.6822/14 is about to be breached, later in the day the bears moved GBP/USD away from the Feb high. But, unless the price falls beneath the nearest supports, such as the weekly PP and 20-day SMA, which would be a bearish sign, the technical studies assure us that the Pound retains a bullish potential and it is able to reach 1.70, if the monthly R1 and Feb high finally give in to the buying pressure.

• Traders’ Sentiment

  The distribution between the bulls and bears is perfectly unchanged compared to the previous repost, as 26% of the positions are long and 74% are short. Meanwhile, the gap between the buy (39%) and sell (61%) orders 50 pips from the spot price went up.

USD/JPY approaches 102.20

“The CPI data could be a trigger for yen strength.”

- Nomura (based on Bloomberg)

• Pair’s Outlook

  While the 20 and 55-day SMAs failed to underpin USD/JPY, the support at 102.20 successfully repelled the attack. Accordingly, the current bearish correction is likely to end near the weekly PP and 38.2%, thus giving way for the latest rally to resume. If this demand turns out to be insufficient to turn the pair around, the support at 101.77/69 (monthly S1 and long-term up-trend) has an even greater chance of restoring the bullish outlook.

• Traders’ Sentiment

  The difference between the longs and shorts widened even more. Now 73% of traders wait for the U.S. Dollar to rise in value (71% yesterday). The change in the share of buy orders was much more substantial—from 55% to 67%.

USD/CHF to cede ground

“As (U.S.) equities underperform, this leads to buying of Treasuries and yields fall. The dollar is softer as a result because it is reflecting other markets rather than internal components.”

- Societe Generale (based on CNBC)

• Pair’s Outlook

  As the resistance at 0.8857 proved to be impenetrable, the bias towards USD/CHF is fairly negative. The currency pair could ultimately give up more than two figures to arrive at 0.86 (2011 lows) before regaining the upward momentum. Still, there is a number of formidable supports that may prevent a precipitous decline. The nearest is a combination of the 20 and 55-day SMAs, followed by the weekly and monthly pivot points.

• Traders’ Sentiment

  The portion of longs fell three percentage points, but the sentiment towards USD/CHF stays explicitly bullish, as 70% of traders expect the greenback to appreciate. The number of commands to buy the buck, in the meantime, plunged from 65% to 47%.